HR Fast Facts: What Is an Allowable Amount for Insurance Claims?

The allowable amount (also referred to as allowable charge, approved charge, eligible expense) is the dollar amount that is typically considered payment-in-full by an insurance company and an associated network of healthcare providers.

The actual amount is typically a discounted rate (agreed on by the provider and carrier) rather than the actual charge of the service. Subscribers may be responsible for the difference if their provider charges more than the allowed amount for services not covered (e.g., from a out-of-network provider) under a plan’s Summary of Benefits and Coverage (SBC).

Here’s an example case:

David Copperfield just saw his doctor for an earache. The total charge for the visit comes to $100.

If the doctor is a provider in the David’s plan’s network, he or she may be required to accept $80 as payment in full for the visit — this is the allowable amount. In this case, David’s carrier will pay all or a portion of the remaining $80, minus any co-payment or deductible that he may owe. The remaining $20 is considered provider write-off, and the carrier can’t bill David for this write-off.

If the doctor is not an in-network provider, David may be held responsible for everything that your health insurance company will not pay, up to the full charge of $100.